Plan to export liquefied gas at Cove Point divides community

Proponents cite cleaner-burning fuel and jobs for the area while opponents express concerns about spills, increase in fracking to meet demand.

By Rona Kobell
onMarch 25, 2014

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When Keith Lavender tells his Southern Maryland neighbors that he works at the Cove Point liquefied natural gas plant, most have no idea where it is. No, not the nuclear plant at Calvert Cliffs; that’s two miles away. No, not the coal-fired plant at Chalk Point; that’s in the next county. If they still look blank, Lavender tells them it’s that platform in the Chesapeake where the fishing used to be so good.

Lavender’s explanations are about to become much shorter. Cove Point LNG’s owner, Richmond-based Dominion Resources, plans to export liquefied natural gas (LNG) from its 131-acre plant in Lusby. If its plans are approved, the plant will send out 85 LNG tankers a year, build its own power plant to chill and liquefy the gas, and bring in more than a thousand workers to complete a vast construction project on these once-sleepy shores eight miles north of Solomons Island.

Dominion executives, Calvert County politicians, policy analysts and energy experts tout the advantages of the United States becoming a gas exporter. They argue that the fuel is far cleaner to burn than coal, and that becoming a supplier to the world would act as a stabilizing force so that Europe and Asia wouldn’t have to purchase oil and gas from Russia and Venezuela.

Exports could buttress the U.S. economy, wean the country from foreign oil and even spread democracy, advocates say, adding that it would also create jobs, improve Calvert County’s tax base and help the county to continue to preserve its rural character because it wouldn’t feel pressure to accept more development. Compared with the export of oil and coal, they say, LNG exports are safe.

But opponents argue that the economic benefits are short-term and not worth the permanent environmental sacrifice. They worry about the increased greenhouse gas emissions from liquefaction — the process of chilling the gas until it becomes liquid releases carbon dioxide and nitrogen oxide into the atmosphere. They’re concerned that more demand for gas will lead to more horizontal drilling and hydrofracking in the Marcellus Shale, a practice that has already damaged streams, killed fish, jeopardized local water supplies and fragmented forests.

They also question whether Dominion has evaluated the threats of importing invasive species and fouling organisms via ballast water to the Bay.

Finally, they’re worried about the unknowns. Dominion has opted to conduct an environmental assessment rather than the more rigorous environmental impact statement that government agencies often require.

“Dominion is not forthcoming about what they’re doing. That secrecy makes me think, what is it that they’re trying to hide?” asked Tracey Eno, who lives in the community surrounding the plant and has formed a citizen group to fight it. “Why are they putting it in the middle of a residential corner? Why are they risking human lives — our lives — to allow industry to profit?”

Dominion executives said they’ve filed more than 21,000 pages of documents with the Federal Energy Regulatory Commission and met with community members. The new facility requires close to 50 federal and state permits, most of which Dominion has secured. It is still waiting for two permits. One is final approval from FERC; the other is from the Maryland Public Service Commission, which needs to sign off on its plans to build the power plant. A decision should come by May 31.

“This is the most scrutinized project ever in Maryland,” said Michael Frederick, Cove Point’s plant manager.

Safety issues

Frederick argues that most of the opposition is coming from climate groups outside the county. He said FERC decided the project did not need the environmental impact statement, which can take several years, because Cove Point did a full review when it expanded in 2005.

“If people are worried about safety, from a safety standpoint, EA and EIS, there is no difference,” Frederick said. “What’s the reason that people are saying (we need an EIS)? It’s not based on a more thorough review. It’s a way to slow or stop the project.”

At present, the United States has no LNG export facilities in operation. One, in Kenai, AK, operated from 1969 until 2011. The plant owner, Conoco Phillips has applied for a license to restart the plant. One other, in Sabine Pass, LA, has all of the required approvals, but it is still under construction.

Several more LNG facilities have applied for permits from both FERC and the Department of Energy; Dominion was the fifth plant to receive the Department of Energy’s authorization. Energy experts believe that only seven will receive authorization; Cove Point, they said, was attractive because a facility already existed there, and it’s close to both the populated Northeast and the gas-rich Marcellus.

LNG facilities “have a pretty darn good record of no accidents,” said Henry Lee, director of environment and natural resource programs at Harvard University and the former director of Massachusetts’ energy office. The most recent one occurred in Algeria in 2004, when an explosion killed 27 workers. That stemmed from gas flowing through an air intake into boilers, a problem that was fixed at every LNG plant worldwide after the tragedy. A fire at an LNG facility in Cleveland claimed 128 lives in 1944. A construction accident at an LNG terminal on Staten Island killed 40 people in 1973. Cove Point had its own scare: an explosion within its electrical substation in 1979.

In the unlikely event of a gas spill in the Chesapeake Bay, Lee said, the liquefied gas is so cold that it would vaporize and go straight up, so there’s no worry of a catastrophe like Deepwater Horizon or the Exxon Valdez.

But that doesn’t mean the risk is zero. Typically, Lee said, FERC and the EPA would be working with plants to reduce emissions, but that may not happen in a time of budget cuts.

Lee said exporting LNG to foreign nations, where they will burn it for fuel, is better for the atmosphere than burning coal. But Dominion’s primary motivation is profit, and it must consider all dangers and mitigate to the best of its ability.

“If I were Dominion, I’d do the most rigorous environmental review I could do,” Lee said. “If you don’t, the environmental community will put you in court, and the judge will make you do one.”

Another unknown is future gas prices, though the Department of Energy estimates they will increase with exports. Many energy experts agree, and that has helped fuel opposition.

“This is not in the best interest of Maryland’s economy, its environment or its health,” said Mike Tidwell, executive director of the Chesapeake Climate Action Network and one of the project’s chief opponents.

Tidwell’s group has organized protests across Maryland to oppose Cove Point, largely because of the upstream consequences. If the demand for natural gas rises, so will the supply; the Department of Energy is predicting that most of that exported gas will come from shale reserves.

In Pennsylvania, where drilling has slowed because of depressed prices, officials are anxious for Cove Point to come online. One company, Cabot Oil and Gas, has already signed a contract to provide Cove Point with gas fracked from the Marcellus.

Cabot has paid several large fines to the Pennsylvania Department of Protection for problems with its well-drilling that led to residents of Dimock, PA, being unable to drink their water. Residents in other parts of the Marcellus have complained that spills and chemicals from the drilling process have sickened children, killed farm animals, devalued their land, turned rural areas into industrial zones and polluted waterways.

Recently, former Pennsylvania environment secretary Michael Krancer said exporting natural gas to the nation’s allies was “a great win for America.”

Frederick, of Dominion, says that the Cove Point project “is not influencing fracking at all.” He takes umbrage at the suggestion that fracking will begin in Western Maryland’s sliver of the Marcellus Shale because of the expansion.

Demand for natural gas

But the company proposed building a 16,000 horsepower gas compressor station in Myersville, a Frederick County hamlet that could receive gas from nearby shale deposits in Western Maryland. When Myersville rejected the idea in 2012, Dominion sued the town and the Maryland Department of the Environment, claiming its permit from FERC superseded local objections. The courts ruled for Dominion, but now a citizens’ group has filed litigation of its own in federal court.

Exports alone won’t increase fracking, energy experts say. A more abundant supply of cleaner-burning natural gas will mean more gas-burning power plants; a conversion of millions of homes from expensive heating oil to gas; a replacement for diesel in long-haul trucking and for petroleum in conventional vehicles; and the possible return of petrochemical and manufacturing companies that left when U.S. fuel costs became too expensive.

But exports could become the tail that wags the dog, said Javier Diaz, a senior energy analyst with Denver-based Bentek, an energy information company. Diaz noted that one of Dominion’s two customers, Japan’s Sumitomo, has some production capacity in the Marcellus Shale.

“We think the additional demand will come from LNG,” Diaz said, “and gas production will react to additional demand.”

Not all environmentalists are fighting fracking or LNG exporting. The Environmental Defense Fund has partnered with the gas companies to attempt to make drilling safer and is advising the Department of Energy.

Both parties in Congress support more natural gas production from shale; President Barack Obama has discussed the potential in his last three State of the Union addresses. And exporting the gas has become more relevant with the situation in Ukraine, said Paul Bledsoe, a senior fellow on energy and society at the German Marshall Fund of the United States and a former top climate-change aide under President Bill Clinton.

Nearly 80 percent of the Russian gas exported to the European Union runs through Ukrainian pipelines. Several years ago, when Ukrainian and Russian officials sparred over gas prices, Russia cut them off. Having a partner like the United States could relieve pressures on existing allies. And it could bring new ones, Bledsoe said, and nurture one of the few “bright spots” in our economy — trade.

“Countries in Europe that have free trade agreements with us now can import our gas. Countries without those agreements can’t,” Bledsoe said. “So if they want it, they’ll need trade agreements, and to get them they’ll have to do certain things.”

But such trade could also lead to expensive, unintended consequences.

Concern about invasives

Mario Tamburri runs one of four centers worldwide that’s developing better systems for diluting invasive species in ships’ ballast water. He divides his time between the Baltimore-based Maritime Environmental Resource Center and the University of Maryland’s Chesapeake Biological Laboratory in Solomons, MD. He lives a mile from the Dominion facility.

After Dominion assured FERC that ballast water would “represent a negligible influence on the Bay,” Tamburri wrote to say that was “unsubstantiated” and that other cases had proven otherwise. While the Coast Guard is working to reduce invasives in ballast water, it doesn’t yet have a standard or a system. Among the invasives thought to have entered the United States through ballast: zebra mussels, round gobies and green crabs. Zebra mussels alone have cost the Great Lakes nearly $1 billion.

Closer to home, the Calvert Cliffs nuclear plant is spending millions of dollars to control the rope grass hydroid, a fouling organism that likely entered on ships. It clogs pipes, disrupts flow and prompts shutdowns.

“It is my professional opinion that the risks associated with intensive shipping activities at Cove Point are much too high for a rural and historic location on the Chesapeake Bay that relies on fisheries (e.g., blue crab and striped bass), tourism and recreational use (e.g., swimming and boating) of the local waters,” Tamburri wrote. “It would simply be irresponsible to proceed with such a project without a better understanding of all potential human health, environmental and economic impacts, and without identifying feasible and reliable options for their prevention or mitigation.”

A FERC spokesman did not return calls for comment.

At Dominion’s LEED-certified headquarters, Frederick said he was surprised to be battling environmentalists. Dominion has earned several awards for its building, its marsh restoration projects and its reefs made from Wilson Bridge rubble. The plant uses just 131 acres of its site; the remaining 800 are in a preserve.

But acrimony over the facility dates back to its founding in the mid-1970s. Maryland hoped to preserve the land, but it didn’t have the funds, so it announced a sale to Columbia Gas. The Sierra Club objected. To avoid a legal battle, Columbia entered into an agreement with the Sierra Club to reduce the facilities’ footprint, preserve much of the land and give the environmental group a voice in future expansions.

Natural gas imports began in 1978. A year later, Cove Point had its fire. Operations suspended in 1980. Around that time, the offshore platform became known for its fishing; charter boat captains would take their customers there as they were sure to catch a plump rockfish.

The plant was dormant until 1994, when regulators allowed it to store gas. That was the year Columbia established the Cove Point Natural Heritage Trust, a board that included representatives from Columbia, the Sierra Club, the Maryland Conservation Council and one community member. It works on local conservation and education projects. Dominion is now its sole funder.

Dominion bought the company in 2002 and began importing in 2003. It expanded in 2008. That was the year everything began to change; the first successful wells were drilled in the Marcellus; imports dropped; and talk of exports began. Today, Cove Point imports just one ship of LNG a year.

More controversies

During Dominion’s expansion period, Patuxent Riverkeeper Fred Tutman said he became concerned about problematic pipelines and stream damage. He said he didn’t get answers from the company.

“Their practice is not to disclose,” Tutman said. “They have no problem sharing only the information that is expedient to get them a permit.”

Tutman’s ire increased when the Calvert County commissioners waived all zoning restrictions on the export project, gave Dominion a tax break and signed non-disclosure agreements to protect sensitive information. Tutman called the actions “a shocking abortion of the process” and said the elected officials “seem to be completely in the thrall of Dominion rather than the people who have elected them.”

Tutman recently resigned as the Cove Point trust’s community member. The group hasn’t met in quite some time, according to executive director Bob Boxwell. That’s probably for the best; the Sierra Club sued Dominion in state court, arguing that Dominion’s plans for export violates their agreement. They lost in the two lower courts but plan to appeal to Maryland’s highest court. The Maryland Conservation Council, on the other hand, supports the expansion.

Boxwell remains neutral. “It’’s a very uncomfortable position for me,” he said.

He’s not the only one feeling uncomfortable. At the public service commission’s recent hearing, dozens of red-shirted Cove Point opponents squared off with hundreds of union representatives. Dominion, based in Virginia — a right-to-work state — has signed agreements to use union labor exclusively at Cove Point.

Dominion’s employees eagerly anticipate having those steamfitters and electrical workers join them. On a recent plant tour, Lavender bicycled through a 1.3-mile tunnel underneath the Chesapeake Bay to Dominion’s offshore platform. The mechanical arms and computers were silent; the only sound was the whipping wind and the chicken bones, courtesy of local seagulls, rolling around on the ground.

Lavender looked wistfully at the quiet scene. It was clear he missed it.